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The Impact of Amazon on The Retail Market in Australia. Will it Affect NZ

The Australian media’s reaction to Amazon’s entry into their market has run the gamut from dismissive of its effect on existing businesses to predicting the wholesale shutdown of traditional retailers. Some say that Australia’s spread-out population will make delivery logistics more difficult and less profitable for the online retailer.

It’s important to remember though, that Amazon’s third-party services, such as branded credit cards and growing cloud services, give it a lot of money to spend on these problems. Amazon can afford to offer products and delivery at a loss as they integrate into the market.

Experts have said that Amazon sees Australia and New Zealand as a single market. At the moment, only limited products are available for delivery to New Zealand, but this will grow as Amazon works out the kinks in its systems.

What does that mean for New Zealand businesses? They should prepare for Amazon’s entry into the market now. It’s important to look at this as an opportunity, both to streamline existing processes and to create new business and reach new markets. Here are some of the important steps to take.

Get There First

Amazon has been in business for more than two decades and are only now seriously entering the Australasian market. This means they need to build relationships with customers. Amazon rely on having a large range, quick delivery and a good price. If Kiwi companies can provide this, customers will stay with them. It’s more convenient to stay with the same retailer, as long as it’s a quick and easy experience.

Re-prioritise E-Commerce

Part of getting there first is making sure your e-commerce systems are working well. Amazon offers an outstandingly easy buying experience for customers. Retailers should spend time and money bringing their systems up to date. Small businesses can access a myriad of ready-made shopping cart options that are inexpensive and integrate seamlessly with websites.

Businesses must also pay attention to their supply chain. It seems unlikely that Amazon will open a fulfilment centre in New Zealand immediately, meaning products will still need to be flown over from Australia. Kiwi companies that streamline their supply chain now will have an advantage over an Amazon model that has to contend with the costs and travel times of shipping from Australia.

Emphasise Points of Difference

Businesses should emphasise the differences between themselves and Amazon. It’s unlikely a business can consistently beat Amazon in price, range or speed once the e-commerce giant settles into the market, so spend time investigating what you can do better than Amazon.

The most obvious point of difference is customer experience. Amazon is large and impersonal, while brick and mortar shops can offer more personalised service. This includes bespoke products as well as proper fittings for clothes and strong relationships with regular customers.

Niche Markets

Businesses that cater to niche markets are also well-prepared for Amazon’s entry. Amazon’s emphasis on supplying everything to everyone allows those with narrow markets to slip between Amazon’s rather large cracks.

Those who market strongly towards their niche markets and offer an experience, either in expertise or the products offered, will continue to grow.

Use Amazon to Grow Your Business

Businesses that aren’t sure how they’ll beat Amazon can join the retailer. The Amazon Marketplace offers retailers a place to sell their products. In fact, for small businesses, the marketplace offers a greatly expanded market at a reasonable cost.

In America, 55% of shoppers start their search on Amazon, bypassing retailer’s websites and Google altogether. If that trend carries over to the Australasian market, having products available on Amazon may be an essential marketing tool.

Amazon Australia is unlikely to be the retailer-ending event that the industry fears, at least in the short-term. But, as always, the business that grows and adapts in the new marketplace is the one that continues to thrive. The information on how Amazon will penetrate into the New Zealand market is still largely hypothetical, but preparing for its arrival is only going to build a stronger business.